Mergers and Acquisitions

Mergers and acquisitions (M&A) represent a popular strategy used by firms for many years, but thesuccess of this strategy has been limited. In fact, several reviews have shown that, on average, firms create little or no value by making acquisitions (Hitt, Harrison, & Ireland, 2001). While there has been a significant amount of research on mergers and acquisitions, there appears to be little consensus as to the reasons for outcomes achieved from them (King, Dalton, Daily, & Covin, 2004). Herein, we begin by reviewing some of the extant research on mergers and acquisitions, identifying the key variables on which the studies have focused. Thereafter, we summarize some of the major work on a primary reason for failure - paying too high a premium - and discuss why executives often delay too long the divestiture of poorly performing businesses that were acquired. Additionally, we examine research suggesting the importance of an acquisition capability based on organizational learning from the acquisitions and complementary science and technology for strategic renewal. Finally, we end with a discussion of the research on crossborder mergers and acquisitions which have become prominent in recent years.